Trends In Retail: Manufacturer Perspective: The brick-and-mortar retail experience - July 2018
By Jessica Chevalier
The demise of brick-and-mortar retail has been greatly exaggerated, say the flooring manufacturers we interviewed for this report. Yes, the sector is undergoing changes-vastly transformative ones-as it seeks to find balance with online shopping, but those changes are largely positive and are bringing with them business for the flooring industry as well as demand for higher-end goods.
“Retail is permanent whitewater,” says Kevin Tierney, vice president of strategic accounts-retail for Tarkett. “It is forever evolving and changing. When you look at the media, everything is doom and gloom, but retail is actually buoying right now. The only stores you see closing are those that didn’t understand the whitewater nature of the market and make the changes they needed to make.”
Tierney points to Amazon’s purchase of Whole Foods as an example of the fact that brick-and-mortar is not only not dead but an important part of the larger omni-channel strategy that retailers are implementing today. “Amazon spent $13.7 billion on Whole Foods,” he continues. “It is building an infrastructure to give customers choice. No longer is retail simply about offering product and making a sale. Customers want to be able to buy online and pick up in store or have an order delivered to their home.” Purchasing Whole Foods’ network of almost 500 stores instantly provides Amazon with the opportunity to expand its customers’ options, and that is representative of what’s happening across the retail market today.
“Ten years ago, we saw this massive rush into e-commerce,” says Mark Oliver, vice president with Mohawk Industries, who has his career roots in retail. “Brands ran to e-commerce because they saw the ease of reaching a customer at any point in time and at any place. In fact, I helped start a brand called Rue La La. It was exciting, and the volumes we were driving were wild-well beyond expectations. But we started to realize that although we could reach the customer easily, there were limitations-namely, you lose that interactive and immersive experience that retail is all about.” According to Oliver, the market has essentially become a wrestling match between offering an immersive experience and ‘just buying.’ He adds, “Right now, we’re seeing the right sizing of retail. The U.S. has significantly more square footage of brick-and-mortar retail per person than anywhere else, and we will probably still see that. But we are pruning the tree to make the market healthier, and we will see more immersive retail experiences moving forward.”
Tierney points out that evidence of brick-and-mortar’s transition toward experienced-based buying can be seen in the fact that today’s retailers aren’t as focused on sales per square foot, as they were traditionally, but customers per square foot. Retailers are seeking to create experiences with their stores, hoping that customers will seek out that experience again and again, resulting in not just a single sale but an enduring “relationship,” frequent visits and continual sales. Creating experience-based spaces for customers to hang out in breeds loyalty and builds community networks centered on these specific locations. Consider the retiree reading the New York Times in Barnes and Noble’s café every morning. He buys a coffee and pastry. Soon, he makes a friend, and they start hanging out at the café together. They play a game of chess, talk, grab lunch, and every once in a while, they leave with a book or CD in hand. Barnes & Noble becomes more than a store in their lives-it’s a gathering space, a place to make connections and establish friendships-and that value is more than any brand can build through simple one-off transactions.
VCT once had a strong hold in the retail industry, both in grocery environments and chain locations, such as discount clothing and craft retailers. Today, retailers are often choosing materials that offer a higher style quotient, quicker installation, and less-demanding maintenance requirements, such as LVT, carpet tile and rubber tile.
Of course, some of the square footage that VCT occupied also goes to polished concrete. Locations where VCT may have been the go-to in prior decades-stores like Costco, Sam’s and the home improvement chains-typically today use polished concrete, which conveys a warehouse-like feel, and with it the insinuation of low prices that these retailers are seeking.
Mohawk Group’s Oliver points out that in addition to affordability, retail brands choose VCT for its ease of installation, so retailers are often replacing VCT with products that offer similar ease, such as LVT, which also offers more options with regard to styling and doesn’t require waxing or polishing.
In spite of the fact that VCT is losing share, it still accounts for between 70% and 75% of the retail market, according to Tierney.
Today’s changes don’t relate only to retail shops but also to the larger shopping centers. These are transforming from commerce-only to community gathering spaces with businesses offering a range of services, including fitness and healthcare. This is, to some degree, out of necessity. As retailers like Sears/Kmart and Toys R Us close their doors, they leave holes behind, and, as retail is in pruning mode, shopping center managers have to find other types of businesses to fill these spaces. But the move is also in line with making retail space more community centers than solely shopping destinations, and banking on the consequential sales that come along with this model.
According to Heidi Vassalotti, strategic accounts director at Crossville, “Retail is going through a significant metamorphosis at the moment. We often see headlines about the ‘death of retail’ when, in fact, it’s quite the opposite. Yes, we are seeing the end of an era when it comes to some legendary department store anchor brands, but we are also seeing the evolution of retail taking place, a transformation of the consumer environment. Developers are replacing or altering sites to accommodate for mixed use-spaces that contain residential, hotel, office space-as well as larger entertainment spaces, grocery stores, healthcare and so on. These changes are allowing for a tenant mix and inspiring ‘clicks to bricks’ as popular online retailers evolve into brick-and-mortar retail locations. Retail is creating more intimate living and working spaces to nurture communities within all-encompassing physical venues. These trends in culture are dictating the associated design.”
The need for creating immersive shopping experiences has become even more important as brick-and-mortar has ceded at least a portion of recurring or simple sales to the ease of Amazon Prime and the like. Purchases that don’t require interaction before a sale-like groceries, consumable home goods and recurring-purchase items-often take place online, so brick-and-mortar retailers must focus on goods that require in-person experience and tactile interaction.
Says Robert Stuckey, director of hospitality and retail markets for Shaw Contract, “Retail design is about creating a signature brand experience for customers through experiential design. Retailers are looking to design to be the differentiator for in-store experiences, as online shopping continues to challenge how we engage with retail environments. To get visitors through the door, these retailers are crafting experiences that create lasting, positive impressions of their brands, enough so that they bring customers back to the space and give them something they wouldn’t otherwise experience at home while shopping from their computers.”
With so much business going online, retailers don’t need as much square footage as they once did. Kohl’s, for instance, has some locations that are 87,000 square feet, reports Inc. That’s simply too much space today, and more than double the size of its newer locations, which are 35,000 square feet.
In January, Kohl’s CEO Kevin Mansell announced his plan to start “right-sizing” its locations “by creating smaller, more profitable stores within its 87,000-square-foot boxes, leaving unused space at some 300 locations that could benefit from traffic-generating retailers like those that sell food.” And in May, it was announced that Kohl’s would lease space to grocer Aldi’s in ten stores, with plans to roll the concept out to around 500 locations. Aldi’s won’t operate inside Kohl’s but be adjacent to the store, with separate staff and services.
Kohl’s believes that the concept could work with other types of retailers as well, such as fitness-based businesses.
The same trend toward smaller footprints can also be seen with Walmart’s Neighborhood Markets, which are an average of 42,000 square feet, compared to its Supercenters, which average 179,000 square feet. “We see a lot of bigger stores downsizing to smaller prototypes,” says Tarkett’s Tierney.
In May, Macy’s acquired Story, a retailer based in New York City’s Chelsea neighborhood. Story, started by Rachel Shechtman in late 2011, is a concept store that utilizes cohesive storytelling to sell goods. Every four to eight weeks, the company launches a new story, completely transforming its store interior and wares to communicate the narrative. This means that Story is a completely new experience each time the customer visits, and the model creates a compelling incentive for consumers to visit regularly.
For all its novelty, Story is a somewhat exaggerated version of what consumers are seeking in retail today-the offer of more than just product. As has been well documented, Millennials value experience over things. As contributor to the online magazine Odyssey Kristin Horton puts it, “Millennials are an experience generation. We don’t want to sit around at a 9-5 job, or buy cars and homes and white picket fences. We aren’t interested in living a life surrounded by material things (for the most part). We don’t want to be breadwinners or homemakers or live routinely. We want to go out and see, feel, taste and touch the world. We are an experience generation.” Story makes the buying of goods representative of an experience, in much the same way that souvenirs represent the experience of a trip or adventure.
Creating more experiential spaces impacts many elements of store design. This means deviating from the tradition of having every branch location look virtually identical and instead celebrating local elements and culture-often, incorporating branding in a way that is subtle yet still impactful. According to Lisa King, vice president of product innovation and insights for Interface, “A decade ago, retail stores were all branded to look like their parent. Today, we see destination-making and place-making going on.”
In addition, today’s retail brands are looking to build bridges through design. “Retail brands are seeking to create physical spaces that the consumer can identify with on a personal level,” notes Vassalotti. “Incorporation of local elements to enhance a sense of community and evoke regional identification are the backbone of current trends.”
Tierney adds, “The era of the cookie cutter store is disappearing.” He points to Comcast as an example of a brand that is working hard to build experience into what was formerly a fairly humdrum retail environment. The company has redesigned some of its showrooms to host events, such as sporting broadcasts. Customers and potential customers can come in and watch, familiarizing themselves with Comcast’s technology and offerings along the way.
Whereas “choice” reigned as the great appeal of retail for several decades, today’s preference for experience means that the goal of a shopping environment is no longer about jam-packing buy-ables into a space but about crafting an environment that is pleasurable. After all, if time-strapped customers are going to leave the convenience of their computers to shop, they want to find some joy in the experience, and a giant floorscape teeming with unkempt racks and overflowing shelves isn’t appealing or relaxing. Instead, visually pleasing, sensory-engaging and tactile spaces that are ever-changing engage and built a rapport with the customer. Today’s consumer wants to be wowed.
Keep in mind as well that each channel of a retailer’s approach needs to be in line with the others if the brand is to truly succeed. Says Oliver, “Stores need to reflect that overall brand and culture. If a brand has an ultramodern approach on its website, you should see the same within the store. The brand approach needs to be consistent. If it’s inconsistent, the brand will seem disingenuous and will lose the customer.” Oliver points to the Coach brand-for which he used to work-as an example of a company using flooring that aligns and communicates its brand messaging. The company’s brick-and-mortar locations feature hardwood, which conveys the warm, comfortable sense of its brand.
Ecore is not the first company many think of in relation to retail flooring, but with its focus on safety, ergonomics and acoustics, it makes a lot of sense that it plays a role in the sector. The company’s products are frequently specified for entries, such as at Walmart and Target, which take a significant beating due to traffic levels and also pose dangers for slip and fall risk. Due to their ergonomic benefits, Ecore’s products are also used in non-customer-facing locations such as in pharmacies and other associate areas where workers are on their feet for long periods. Says Bo Barber, vice president of commercial flooring for Ecore, “We are finding that businesses are starting to take a closer look at associate wellness as a key differentiation. This is feel good, but it’s also about the bottom line. Ergonomic flooring increases performance and decreases absenteeism. Those are major issues. If we mitigate the discomfort associated with standing, associates show up to work every day. It also minimizes mistakes, which can be costly. When people are alert and feel good, they perform at a higher level.”
Ecore also has a substantial presence in the fitness market. Here, ergonomics and safety play a huge role, as does acoustics. With people dropping weights and utilizing machines, noise can be troublesome both to users of the space and neighboring tenants. Barber points to one client with whom it is currently working to find solutions: a fitness facility located above a recording studio. “The retail built environment is changing,” Barber adds. “It is less rural strip mall today and more urban and vertical, where structure-borne noise is a big issue.”
Ecore has two acoustic engineers on staff and contends that while many assume LVT presents a better acoustic option than concrete, that isn’t actually the case. According to Barber, “Acoustically, LVT, VCT and polished concrete have only negligible differences when it comes to structure-borne noise. It’s almost a trivial impact.”
The trend toward hard surface flooring use across both the commercial sectors means that some retailers are dealing with these issues for the first time. He adds, “Right now, I would say we are looked at as first responders to acoustic problems. For that reason, retailers who have major issues often come to us directly seeking solutions. We are trying to get in front of A&D more to solve these issues proactively rather than reactively. That is always cheaper than fixing a problem that already exists.”
THE ROLE OF FLOORINGTHE ROLE OF FLOORING
As the single surface that every shopper comes in contact with, flooring plays an important role in retail-and even more so with today’s focus on creating experiential, immersive environments. Says Vassalotti, “In our visually driven world, consumers are more attuned than ever to the attractiveness of retail spaces, including flooring’s appeal in the overall design scheme. Flooring’s aesthetics and technical performance matter greatly in the retail environment.”
In retail, where first impressions are king, flooring sets the stage. According to Rob Brockman, channel marketing manager for Armstrong, “Branding helps to set an experience apart, and flooring plays a key role in conveying a brand message and reinforcing a brand image. Retailing is all about the experience, and nothing sets the visual foundation of a store like the choice of flooring. Flooring is the critical first impression.” Interestingly, several interviewees pointed out that niche and mom-and-pop stores are often more willing than larger retailers to jump in with bold styling. As a result, they often choose higher-end product that makes a real design impact.
One of flooring’s most important roles in retail is communicating transitions-both into the world of a brand and to various destinations and touch-down spaces within the floorscape. “Consumers pick up a lot of cues and vibes from the floor,” says Oliver. “And using interesting, high-texture products really makes customers feel that they are entering a new environment when they walk into a retail location.” Oliver says that retail locations today are favoring hardwoods, heavily textured woven products, LVT and rugs. These may be used across the entirety of a space or in certain areas to designate a unique or special location. “Our rug business is really booming,” Oliver adds. “It’s a simple change that retailers can make to really surprise the customer.” Mohawk has merged its hospitality rug program into retail and reports that both traditional woven rugs and bound broadloom are popular choices.
Stuckey also notes the importance of using materials to establish not only the right look but also the right acoustic vibe. “Rugs are the key to managing spatial acoustics,” he points out. “We continue to see great branding opportunities for retailers as they utilize rugs in conjunction with hard surfaces to continue to create memorable guest experiences with the right acoustics.”
Of course, with the drive toward mutability in retail, products that offer quick install and removal are valued. Flexibility has always been a concern for store designers, and more so today than ever before. Trends change quickly, and reacting to trends in ways that surprise the customer keeps a store top of mind. Oliver reports that Mohawk has retail customers right now that are talking about changing their floors month to month-by using carpet tile and resilient tile, they don’t have to worry about transition strips or adhesives, and a floor can be changed out overnight. Some of these retailers are implementing the concept currently. “It gives them the ability to delight their customer,” Oliver says. “If a retailer can create buzz, it will drive traffic, sales and profits.” One can only hope that the retailers executing these strategies are finding a reuse option for the floors that they are removing after such brief tenures.
While some retailers are thinking of flooring proactively as part of retail design, Tierney believes that many are lagging. “I believe that the floor is underrated and underused at retail,” he says. “Retailers haven’t realized that the floor plays a major role in creating an experience. When I ask my clients, ‘Is your floor a cost or a revenue generator?’ most say cost. So I try to teach them that the floor has an important role in generating revenue, that the floor should be an experience, used for branding, designs and even technology, such as our luminous floor that can be used for messaging.” Tarkett currently offers its luminous floor to the corporate and hospitality segments, among others, and will launch it to retail shortly, and Tierney is hopeful that customers will soon realize that since they are paying for the material and real estate anyhow, they might as well maximize the bang for their buck with dynamic flooring.
Echoing Tierney’s sentiment that flooring can do more than simply exist in a space, King believes that wayfinding plays an important role in retail and should be a part of every design initiative to invite exploration. A large, open space is simply ineffective if it is not thoughtfully designed with touch-down spaces and areas of interest.
Stuckey reiterates that point, noting that flooring is a key component of experiential design. He adds, “By utilizing flooring appropriately, retail designers are able to convey different visual components within each unique experience and drive consumers to different areas. Retailers are even using flooring as a wayfinding tool to illuminate unique areas of online interaction.” In this way a retailer has the ability to control the customer experience to a greater degree, pulling them through the store in a way that is both most beneficial to the consumer and the retail brand.
Says Brockman, “An effective design can communicate a brand’s unique image as well as influence the perception of quality and value in the first few seconds as a customer enters a shop. Flooring is critical since the floor is one of the largest backdrops designers have to work with. Flooring can play a key role in determining look and feel, interior layout as well as improve lighting, acoustics and indoor air quality. For example, lighter color flooring surfaces will reflect more light, reducing the amount of illumination (and lighting energy) required. In addition to aesthetics, the floor plays a practical role in the shopping experience. Many times, whether the customer knows it or not, the floor is driving the traffic by way of design. Color and pattern on the floor can guide the visitor, keep an open look and help define featured spaces.”
Brockman adds, “Customers are looking first and foremost for low maintenance solutions that meet their design requirements and look newer for longer. While many features of a store layout can be changed easily and displays updated from season-to-season, some choices, including flooring, represent a longer commitment but not a permanent one. It may be hard to predict how styles and preference may change, so choosing a product with timeless appeal-and one that can weather trends as well as traffic-will go a long way in making the investment count. Established brands with multiple locations across the country need the flooring to last longer because remodeling so many thousands of square feet is costly. Smaller brands and those more oriented to the latest trends may renovate in as few as every five to seven years but expect their floors to look as great in year seven as in year one.”
In spite of the trend toward quick in/quick out flooring options, more permanent flooring solutions, such as ceramic tile, are still an important part of the retail environment. Says Vassalotti, “Flooring in retail continues to be the necessary workhorse to support the high traffic retail needs. You continue to see tile a part of a brand’s image to enhance the consumer experience. New retail brands may experiment with less durable products such as VCT as they launch physical store locations. However, the cost of replacement due to wear and tear of less durable flooring often results in those retailers replacing early concept materials with a more durable porcelain.”
Ceramic offers long-term durability in a low-maintenance platform. In addition, style and format options in ceramic have exploded over the last decade, offering expanded use options and cutting-edge visuals, both realistic faux looks and more conceptual designs. And, of course, a long-term installation is inherently more sustainable than a short-term one.
As in the other commercial sectors, the use of polished concrete has taken a bite out of sales of floorcovering to retail environments, but the experts with whom we spoke believe specifiers are realizing it’s often a poor choice for retail with regard to acoustics, comfort underfoot and safety, especially slip and fall risk. “In my opinion, polished concrete is oversold,” says Tierney. “It has a place in the market, but it is not the right choice for all segments. Its use is cyclical: some are trying it out now, some have tried it, some are coming back to other materials after a bad experience. Specifiers need to understand a customer’s business in order to help them choose the right solution.”
The path to market can be somewhat different in retail than in other sectors. Tarkett works directly with end-users on many projects. The company used to work through specification but found that communication was like a game of “telephone,” in which the dialogue got diluted. Having a direct relationship enables greater transparency on all fronts. In addition, it allows Tarkett to understand the needs of a retailer more intimately and offer solutions that address these needs and its pain points.
Tierney points out that retail is a different animal than other segments because winning a specification typically means providing material for all stores across that brand. He notes that the trend toward downsizing and unique spaces has made serving the retail industry somewhat more challenging from a logistics standpoint. Offering a multitude of options and personalization is key, and that means more SKUs and smaller quantities of each.
Oliver agrees, adding, “You have to have more options than ever before, and it’s not just about platforms but also personalization. Most clients want to tweak a product a little, even though we offer 1,000s of SKUs.” He adds that brands are heavily involved in product selection for their stores.
Millennials largely have a commitment to supporting businesses that make good social, cultural and environmental choices, and one way that businesses can do that is through design. But sustainable and biophilic design isn’t just marketing fodder; the benefits of incorporating natural elements have the power to positively impact the physical and mental health of both a business’ customers and employees. Says Armstrong’s Brockman, “More and more designers and building owners also are recognizing the benefits of biophilic design, which encompasses everything from fresh air and sunlight to finishes with nature-inspired colors and patterns. The connection to nature is much bigger than a trend; it’s in all of us. If we are engaged in an environment that is less stressful, it creates a positive feedback loop. Biophilic design doesn’t confine designers to a narrow range of choices. Products that have physical attributes to back up the visual impressions-that are soft underfoot, warm to the touch, have sound-dampening qualities and are easy to maintain-have an edge.”
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